Free Trade Agreements (FTAs)
Free Trade Agreements (FTA) can affect costs, access, documentation and compliance. Being able to use FTAs and handle trade formalities in different countries can make a huge difference for any business. Read on to find out more about FTAs and how CALISTA intelligent advisory (CIA) can help businesses leverage existing FTAs .
Positive impact of regional agreements or FTAs
Regional agreements and FTAs help create trade among member countries. Bloc countries gain opportunities to trade with one another easily by removing barriers to investment and trade. For example, removal or reduction of tariffs in these agreements can result in lower prices for consumers in the participant countries.
FTAs can also lead to more employment opportunities. If the regional agreement includes removal of restrictions on labor movement, participant countries can expand job opportunities. Economic integration can also lead to a similar outcome.
Regional trade agreements can also foster cooperation and consensus among member nations. With a smaller number of countries, participants may find it easier to find common ground and agree. Regional similarities can also help lead to closer political cooperation.
Overall, companies experience net benefits from FTAs. This can include:
- increase in export sales
- new business opportunities
- greater ease of doing business
- lower tariffs
- deepening of the production network and supply chain
Negative impact of not leveraging FTAs
Countries negotiate and sign FTAs with the aim of providing a better environment for business, particularly for those in their own territories. The more businesses within these agreements use FTAs, the more benefits can be realized.
The opposite is also true. Businesses that do not use or leverage FTAs may face negative impact. Regional trade agreements tend to bring about increased competition. A business that is unable to use FTAs to its advantage might be left behind
Regional agreements have also brought about more complex and time-consuming procedures for proper documentation of products, increased documentation costs and time delays. For businesses that are affected by these changes, it is crucial to find ways to navigate FTAs and trade processes.
Knowledge of FTA provisions
In general, businesses that have gauged the impacts of regional trade agreements can quickly adjust their business plans to maximize the benefits of FTAs to their company and lessen the costs.
One of the most common impediments to FTA use is lack of information or lack of access to information.
These businesses do not have detailed knowledge of the relevant FTA provisions that they can use to their advantage. The knowledge spectrum goes from companies that have a thorough and detailed understanding of FTA to those that have limited knowledge or only know of some aspects of FTA provisions, and to, the other end of the spectrum, not being aware of or not having read any FTA provisions at all.
The lack of knowledge and use of FTA is often because of:
- lack of interest in FTAs
- inadequate outreach and training
- lack of knowledge of tools that can help navigate trade formalities
- lack of access to these tools
SMEs have the added difficulty of having limited human resources and management training. Some companies are still in a transitional period and have yet to fully adapt their processes toward leveraging FTAs. In any case, if the impact of FTA has not been included in the planning for your business, the time to start including it is now.
CIA can help businesses leverage existing FTAs
With CALISTA intelligent advisory (CIA), trading and leveraging FTA provisions has never been easier.
CIA provides advice on FTA, export and import regulations, trade document requirements, HS product classification and other trade information.
Using machine learning, CIA has made it easier for businesses to access comprehensive information on the latest FTAs, as well as determine duties & taxes or landed costs, preferential tariffs and documentation requirements.
Easily find the recommended HS Codes for various products
The Harmonized System (HS) is a standardized numerical system of classifying goods used by the international trading community. Customs agencies around the world use this method to assess taxes and duties, identify products and collect trade statistics. HS is the foundation for systems used in many countries and is updated every five years.
With CIA, you can find the recommended HS Codes for various products just by using a simple description of the product. It’s that easy!
Determine the export or import requirements for specific product
Products have different import or export requirements in different countries. Lack of access to this knowledge can lead to a time-consuming process. CIA Trade Advisory helps users quickly determine the import or export requirements of a product.
The total cost of getting a shipment to its last destination is called the landed cost. Landed cost includes taxes, shipping, fees and duties. A number of factors can affect the total landed cost. They include insurance, customs/regulatory fees, payment processing, cost of brokerage, storage, packing, agent commissions, fraud prevention, and currency conversion.
To save money and avoid bill shock, you can plan ahead for landed costs. You can make choices that can help reduce costs. For example, consolidated shipments tend to be less expensive and ground shipping costs less than overnight. In general, the type of product and speed of transport affect the overall shipping costs.
Our services include:
HS Smart Search – applicable HS codes at your fingertips. Simply enter a layman product description, country of origin and country of destination and you’ll get the correct HS code.
Landed Cost Calculator – get the total landed cost and tax payable fast with the Landed Cost Calculator from CIA.
Compliance eAdvisory – just enter an HS code and you’ll quickly get comprehensive trade compliance information.
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To learn more, visit our page on https://www.tradeadvisory.ai/CIA/ or contact us at mailto:[email protected] to schedule a demo today!
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